Chapter 7

Productivity and Supply

In this chapter we begin to investigate the theory of supply. Supply depends on the conditions of production, so we begin with a study of production, and specifically ask how outputs vary when the quantity of one input used varies.

Begin the chapter

Overheads for this chapter Note that the overheads are not in the same order as the topics in the chapter.

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You Need to Know

To understand this chapter, you will need some concepts from

Contents

  1. Production and Diminishing Returns
    1. Production and Supply
    2. Diminishing Returns
    3. Production Function
    4. Marginal Productivity
    5. The Law of Diminishing Marginal Productivity
    6. Average and Marginal Productivity
  2. Diminishing Returns and Efficient Allocation of Recources
    1. Efficient Allocation of Resources
    2. The Problem of Allocation
    3. Visualizing The Problem of Allocation
    4. The Marginal Approach to Allocation
    5. The Equimarginal Principle
  3. Production and the Firm
    1. Business Firms
    2. Objectives of the Firm
    3. Profit
    4. The John Bates Clark Model of the Firm
    5. Short and Long Run
    6. The Firm's Decision
    7. Value of Marginal Product
    8. Maximization of Profits and the Equimarginal Principle
    9. Visualizing Profit Maximization
  4. Chapter Summary

To the next chapter: Cost and Supply.

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